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CITATION: Jung v. Cloverdale Mall Inc., et al, 2015 ONSC 2386

COURT FILE NO.: CV-10-400992

DATE: 20150415

BETWEEN:

JOHN JUNG

Plaintiff

– and –

CLOVERDALE MALL INC., BRITISH COLUMBIA INVESTMENT MANAGEMENT CORP., BENTALL LP, PRO-TURF LANDSCAPING, and METRO ONTARIO INC.

Defendants

B. Stephenson, for the Moving Party, Plaintiff

M. Blinick, for the Respondent, Defendants

HEARD: March 25, 2015

s.a.Q. akhtar j.

Introduction

1Indemnification provisions are seldom clear and unambiguous. In this case, the moving party asks the court to grant summary judgment on the basis of one such provision, ordering the respondent to indemnify it for the cost of litigating a personal injury claim that occurred on the premises of the respondent’s mall. The provision in question is found within the lease agreement between the parties.

The Plaintiff’s Claim

2The facts of this case are not in dispute. Since 1985, the moving party, Metro Ontario Inc. (“Metro”) has rented space for its grocery store within a mall located at 250 The East Mall, Toronto, Ontario (“the Property”). The Property is owned and operated by the respondent, Cloverdale Mall Inc. (“Cloverdale”). Metro’s occupancy was governed by a lease agreement (“the Lease”), which divided responsibility for maintenance of the Property between the parties. All areas outside the Metro store were Cloverdale’s sole responsibility. As such, it provided maintenance of all of the common areas, such as the entrance/exits, roof, sidewalks and parking facilities. Cloverdale was also responsible for removing snow and ice from the common areas of the Property.

3On October 1 2008, Cloverdale hired a snow removal company, Pro-Turf Landscaping (“Pro-Turf”), to remove snow and ice as necessary during the 2008/09 winter season. Part of Pro-Turf’s remit was ensuring the common areas were properly serviced. Pro-Turf therefore assumed responsibility, inter alia, for removing any snow or ice covering the areas of the entrances, exits, walkways and parking areas. It is agreed that the selection, negotiation and payment of Pro-Turf was the solely conducted by Cloverdale.

4On December 20, 2008, Mr. John Jung, the plaintiff in the main action, slipped and fell on ice when walking along the pathway leading to the south main entrance to the Property. Mr. Jung brought an action against Metro, Cloverdale and Pro-Turf, alleging a litany of negligent conduct, including a failure of inspection, failure of maintenance, failure to clear snow and failure to maintain adequate logs. He further alleged the parties did not properly address water run-off from the roof of the Property caused by melting snow, which subsequently froze on the walkway.

The Litigation and Settlement

5Metro was joined as a co-defendant to the proceedings even though clearing the common areas of snow and ice was the exclusive responsibility of Cloverdale and Pro-Turf. Some time before these proceedings, Cloverdale and Pro-Turf entered into a Pierringer Agreement¹ with the plaintiff. Pursuant to that settlement agreement, both Cloverdale and Pro-Turf withdrew from the litigation, leaving Metro as the sole defendant in the plaintiff’s action.

6Throughout June, July and August 2014, Metro requested that Cloverdale pay for its defence pursuant to an indemnification provision contained in the Lease. Cloverdale took the position that they had no obligation to indemnify.

The Terms of the Lease

7The Lease outlines the duties and roles of Cloverdale and the signatory tenant. Three sections are of particular significance in this case. Section 12.01, which governs Cloverdale’s duties with respect to insuring the Property, reads as follows:

Section 12.01 - Landlord’s Insurance

The Landlord shall throughout the Term provide and keep in force or cause to be provided and kept in force:

(a) comprehensive general liability insurance with respect to the Landlords operation of the Shopping Centre for bodily injury or death and damage to property of others such policy or policies to be written for not less than $3,000,000.00 for any one accident or occurrence

8Section 12.02, which outlines Metro’s corresponding obligations in the insurance context, provides:

Section 12.02 - Tenant’s Insurance

The Tenant shall during any period of occupancy prior to the Commencement Dates and throughout the entire Term, at its sole cost and expense, provide and keep in force the following insurance:

(a) comprehensive general liability insurance for bodily injury or death and damage to the property of others with respect to all business conducted in, at, upon all from the Leased Premises and the use and occupancy thereof and the use of the “Common Areas” and Facilities, including the activities, operations and work conducted or performed by the Tenant, by any other person on behalf of the Tenant, by those for whom the Tenant is in law responsible and by any other person on the Leased Premises; such policy or policies shall be written with inclusive limits of not less than $3,000,000.00 for any one accident or occurrence or such higher limits as the landlord shall reasonably require from time to time… [Emphasis added.]

9Finally, Section 12.06, an indemnification provision, outlines the circumstances in which the costs of litigation against a tenant will be reimbursed by the landlord:

Section 12.06 - Indemnification of Tenant

Except as provided in Section 12.03, the Landlord shall indemnify the Tenant and save it harmless from and against any and all claims, actions, damages, liabilities, losses, costs and expenses, including legal expenses, whatsoever including, without limitation, those in respect of loss of life, personal injury or damage to property, arising from any occurrence caused by the negligence of the Landlord or any person for whom the Landlord is responsible at law and not covered by the insurance required to be placed and maintained by the Tenant pursuant to this lease or otherwise maintained by the Tenant. The Indemnification shall survive the expiration or sooner termination of the Term. [Emphasis added.]

Positions of the Parties

10Both parties agree that the central issue in this case are the interpretation of Sections 12.01, 12.02 and 12.06, reproduced above. Ms. Stephenson, on behalf of Metro, asserts that these sections, which include the phrase “save it harmless”, require Cloverdale to pay Metro’s incurred and ongoing litigation costs. In her argument, the requirement for insurance on “Common Areas” arises only when Metro uses the “Common Areas” for a particular purpose, for example by setting up a promotional stall. In the absence of any use by Metro of the “Common Areas”, Section 12.01 imposes a duty on the landlord, Cloverdale, to insure them. In such circumstances, the “proviso” contained in Section 12.06 does not apply. Since all the allegations in the Statement of Claim related to the negligent operations of Cloverdale and Pro-Turf, the landlord is obliged to fund the claim against Metro.

11Mr. Blinick, counsel for Cloverdale, submits that Section 12.06 does not impose an obligation on Cloverdale to indemnify Metro, as the requisite conditions have not been met. Specifically, because Section 12.02 obliges Metro to place insurance on the “Common Areas”—where the plaintiff’s claim arises—the proviso in Section 12.06 is triggered and Cloverdale is exempted from its duty to indemnify. Mr. Blinick refers the Court to a line of cases that indicate that when a party covenants to insure against certain damages, that party assumes the risks associated with the insured damages and is barred from claiming damages against the other party to the contract.

The Test for Summary Judgment

12 Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Regulation 194 states that:

(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence

13Rule 20.04(2.1) outlines the powers of a motion judge hearing a motion for summary judgment:

(2.1) In determining under Sections (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.

14In Hyrniak v. Maudlin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 49, the Supreme Court of Canada concluded that there will be “no genuine issue requiring a trial” where the motion judge is able to reach “a fair and just determination on the merits on a motion for summary judgment.”

15When faced with a summary judgment motion the court must therefore determine whether the process:

(1) Allows the judge to make the necessary finding of fact,

(2) Allows the judge to apply the law to the facts, and

(3) Is a proportionate, more expeditious and less expensive means to achieve a just result.

16Both parties agree that there is no genuine issue requiring a trial in this motion.

Does Section 12.06 Require Cloverdale to Indemnify Metro?

17I agree with Ms. Stephenson that the Pierringer Agreement did not affect the indemnification provision contained in Section 12.06 of the Lease. The Court of Appeal for Ontario, in James v. Miller Group Inc., 2014 ONCA 335, 120 O.R. (3d) 155 made clear that indemnity provisions survive Pierringer Agreements in the event that litigation continues.

18I agree with Mr. Blinick that there is authority preventing a party to a lease agreement who has obtained insurance from claiming the insured damages from the other party to the contract. However, I conclude that the case at bar is distinguishable due to the existence of Section 12.06.Indeed, in Orion Interiors Inc. v. State Farm et al, 2015 ONSC 248, [2015] O.J. No 46, a case relied upon by Mr. Blinick, Chiappetta J., made this very point at para. 31 when she re-stated the rule but emphasized that an “explicit provision to the contrary is required to avoid this consequence”.

19The determination of this case, therefore, rests solely upon whether the proviso contained in Section 12.06 of the Lease applies. Unfortunately, the section is hardly a paragon of clear drafting. It contains a two-part proviso to any indemnification payable by Cloverdale. In plain terms, Cloverdale will not be liable to indemnify Metro if:

(1) Metro was required to place insurance on the “Common Areas”, or

(2) There was an existing insurance policy maintained by Metro.

20I conclude that both parts of proviso apply on the facts of this case.

(a) The “Common Areas”

The "Common Areas"

21The first part of the proviso absolved Cloverdale of any responsibility to indemnify Metro if the latter was required to take out insurance on the common areas. Section 12.02 indicated that it was mandatory for Metro to keep in force insurance on all business conducted in the property and “the use and occupancy thereof and the use of the Common Areas”.

22There is no dispute that the location where the plaintiff claims that he fell constitutes part of the “Common Areas”. Metro, as noted above, submits that only particular usage of the common areas would require insurance, such as the use of a promotional stall or other structure within the area. Despite Ms. Stephenson’s able arguments, I am unable to agree with this submission. The phrase “use of the Common Areas” captures a broader array of activity than Metro suggests, and includes the day-to-day activities that must take place within these areas, such as returning shopping carts and entering the store. In my view, Metro was required to place insurance on the common areas pursuant to Section 12.02 of the Lease and this requirement was reflected by the fact that Metro had indeed taken out such insurance. The proviso contained in Section 12.06 applies, and Cloverdale is not, therefore, under any duty to indemnify Metro.

(b) Insurance “otherwise maintained by the Tenant”

Insurance "otherwise maintained by the Tenant"

23I am also of the view the second part of the proviso applied. The words “or otherwise maintained by the Tenant” specifically envisages the situation where covering insurance taken out by Metro was already in place. The evidence of Joanne Penney, risk manager for Metro, cross-examined by Cloverdale on February 5, 2015, revealed that Metro had put insurance in place for the period encompassing the plaintiff’s claim. The insurance company, according to Ms. Penney, had confirmed that there were no issues of coverage.

Conclusion

24For the above reasons, I conclude that Cloverdale is not required to indemnify Metro. The provisos contained in Section 12.06 relieve Cloverdale of any such obligation in these circumstances. Metro’s motion for summary judgment is therefore dismissed.

Costs

25With respect to costs, the parties jointly recommended that an award in the amount of $17,000.00 to be paid by the unsuccessful party was appropriate. Costs are accordingly fixed in the amount $17,000.00, to be paid by Metro to Cloverdale within 30 days.

S.A.Q. Akhtar J.

Released: April 15, 2015